China Press Review – February 15, 2019

Press review

US-China trade talks: Steven Mnuchin positive after ‘productive meetings’
WeChat account linked to Chinese state media says teams worked late into night and shared ‘good atmosphere’ also cited by White House’s Larry Kudlow
But the countries were far apart on major US requests as they continued to seek an agreement, sources said

China and United States make ‘progress’ in Beijing but trade war talks to continue in Washington next week
Chinese Vice-Premier Liu He met US counterparts, US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin, on Thursday and Friday Truce deadline agreed between China’s President Xi Jinping and US President Donald Trump in Argentina in December set to expire on March 1

US/China trade war talks to continue next week after ‘progress’
Stock markets rise on Friday as the latest talks end without a deal but signal continued hope of a truce.

In China, government policies, rather than GDP numbers, tell us most about markets
Hannah Anderson says in trying to balance the need to support the economy with the need to control systemic risks, Beijing is using a mix of monetary and fiscal measures that investors should watch closely to gauge the health of the economy

China: Better than expected trade data could be distorted – ABN AMRO
According to Arjen van Dijkhuizen, senior economist at ABN AMRO, China’s latest trade data came has come in better than expected, but after remaining solid during January-October 2018, trade data started weakening since November, and poor December data added to fears of a global slowdown.

China’s government tells banks to ‘increase financial support’ for private firms to aid slowing economy
Beijing issues rare directive telling lenders and financial regulators to help boost growth after 2018 cooled to its slowest rate in 28 years New instructions reflect underlying anxiety among leaders over economic prospects amid the trade war with the United States

China’s bad debt managers risk becoming bad credits themselves
China’s bad debt managers, whom Beijing hopes to play a key role in resolving financial risks, are in danger of becoming bad credits themselves as the leverage crackdown that fueled a boom in their business now threatens their own access to funding.

China’s slowing factory prices add to deflation concerns
China’s factory inflation decelerated for the seventh month in a row on softening demand and high year-ago basis. The producer price index rose 0.1 per cent in January from a year earlier, while the consumer price index rose 1.7 per cent, according to the National Bureau of Statistics. That compares to estimates of 0.3 per cent and 1.9 per cent respectively The moderating factory prices raise the prospect of a return of the deflation seen between 2012 and 2016 which depressed corporate earnings

Apple’s Big Strategic Mistake In China
The solution? “They need to lower expectations for this market and reduce the price of the phones to kick start sales and to deal with currency fluctuations,” according to Eglow. Apple’s strategic mistake in China is neither new nor unique. Too often, fast growing companies with a strong brand take consumers for granted; they assume that they will always be there to purchase their products. Instead, consumers start to search elsewhere for value.

Chongqing battles rising unemployment as China’s traditional industrial base follows nationwide slump
The economy in the landlocked city grew just 6 per cent in 2018, its slowest pace since 1989, falling behind its own 8.5 per cent target Local government struggling to find jobs for residents and returning migrant workers who were laid off as the US-China trade war forced factories to downsize

Remember that ‘Chinese boycott’ of Canada Goose down jackets because of Meng Wanzhou?
Revenue numbers show it didn’t happen, with sales rising, and forecasts up Despite a December call for Chinese buyers to spurn Canada Goose after the arrest of Huawei’s CFO in Vancouver, sales climbed 50 per cent in Q4 2018 Revenue forecasts have been increased compared to November’s predictions – but Canada Goose stock tanked on Thursday on the back of weak US retail data

Ant Financial acquires UK payments company Worldfirst
Alibaba affiliate Ant Financial has agreed to acquire London-based payments company Worldfirst. The UK firm announced the deal in a memo to its clients but did not disclose the size of the acquisition. Under the terms, Worldfirst will remain independent. Worldfirst CEO Jonathan Quin said in the memo that all of the company’s current customer and account information will remain unchanged after the deal.

Briefing: Ant Financial acquires UK payments company Worldfirst

Chinese tech startups eye Japan’s real estate and tourism sectors
Entrepreneurs develop savvy AI and VR apps for investors and foreign visitors

China’s love-hate relationship with gaming won’t stop it from dominating the industry
Nowadays, this ambivalence manifests itself as a strained relationship between the market forces of entertainment and an older generation wary of things they don’t understand. However, unlike in the past, China not only recognizes the importance of embracing change, but also the capability to shape how it impacts the broader culture, putting it on the path to become a gaming powerhouse.
In 2018, the country had an estimated 463 million mobile game players, according to a report by China’s Game Publishing Committee and Gamma Data. That’s almost 60% of all mobile phone users in China and 44% of all mobile game players worldwide, according to Statista data; around 33% of all Steam users come from China, based on calculations via publicly available figures about the platform’s user base. In 2019, data from Statista shows that the country is projected to lead the world in mobile game revenue, and just recently, the central government recognized gaming as an official profession.

China’s love-hate relationship with gaming won’t stop it from dominating the industry

Telecoms industry calls for Europe-wide network testing regime
The telecoms industry has called on European governments to join mobile operators in establishing a testing regime to protect network security without having to resort to the disruptive step of excluding vendors from the market

Huawei to open its first South African data center
Chinese telecommunications company Huawei is working with South African partners to launch services at its first cloud data center in the country in March. The center will be opened in Johannesburg, followed by another one in the coastal city of Cape Town at a later date. Huawei also said it would deploy localized public cloud services based on domestic policies and requirements as part of its plan for a fully-connected Africa driven by data and artificial intelligence (AI) applications.

Briefing: Huawei to open its first South African data center

China sinks teeth into chocolate
Chocolate makers globally have made converts and are competing fiercely for the high returns in the Chinese market, spotting the potential financial rewards in the world’s second-largest economy. The chocolate market in China has boomed since the 1990s as leading companies such as Mars, Ferrero, Nestle, Hershey and Cadbury ent¬ered the country in their quest to turn locals into chocoholics. Both domestic and foreign manufacturers continue to research and develop new products geared toward Chinese tastes such as chocolates filled with fruit, soft candy, star anise or milk flavouring.
They have also experimented with replacing European-style liquor-filled chocolates with the Chinese spirit baijiu or with green tea.

China’s 2018 aquaculture output tops 50 mln tonnes
China’s aquaculture output exceeded 50 million tonnes in 2018, accounting for over 78 percent of the country’s total aquatic products output, official data showed. China is the world’s only country that raises more aquatic products than what it fishes, according to the Ministry of Agriculture and Rural Affairs. Exports totaled 23.3 billion U.S. dollars, with a trade surplus of 7.5 billion dollars registered last year, narrowing down from the previous year.

The Rise of Islamic Finance on China’s Belt and Road
The BRI in the Gulf has given rise to Chinese investment in developing the Islamic financial sector.

Will China let Belt and Road die quietly?
Xi’s global investment program faces domestic criticism amid economic and fiscal worries

Rough road ahead
From land acquisition to hiring of personnels-challenges abound to implement contracts under the BRI While western investors have generally viewed Nepal’s political instability and its rugged terrain as challenges to investments in infrastructure, Chinese investors have deemed Nepal adequate for investment ‘because of investment-friendly policies from government side.’As Nepal continues to sign and expedite major projects under the Belt and Road Initiative (BRI) in the ‘hydropower generation, manufacturing, river training and agricultural industries,’ for example, it is especially important to evaluate how infrastructure projects have fared in Nepal and what kinds of challenges they face in upholding the terms of the contract, progressing, and meeting deadlines.

‘Naive’ Sweden rewrites its China strategy after year of growing trade ties and diplomatic rows
Beijing’s Scandinavian trade partner tries to balance its commitment to human rights and democracy with need to maintain economic relations with China

Chinese-American engineer charged with stealing US$120 million worth of trade secrets
You Xiaorong, 56, of Lansing, Michigan indicted for theft of formulations for bisphenol-A-free coatings used in food, drinks cans Chinese national Liu Xiangchen, 61, and relative named as co-conspirators

Will China Seize Taiwan?
Wishful Thinking in Beijing, Taipei, and Washington Could Spell War in 2019

US commander pushes for more funding to counter China’s influence in Indo-Pacific
Admiral Phil Davidson tells Senate panel Beijing is seeking to ‘bend, break and replace the existing rules-based international order’ He warns China has become the ‘principal threat’ to American interests, people and allies with its PLA modernisation

The U.S. Withdrawal From Syria Is an Opportunity for China
China has also demonstrated its interest in taking advantage of economic opportunities in post-conflict Syria, which the World Bank estimates to be a staggering $400 billion. Two-hundred Chinese companies were present at the 60th Damascus International Fair in September 2018, where they pledged deals ranging from car manufacturing to development of mobile hospitals. And U.S.-led sanctions against the Assad regime and diminishing Western influence in the conflict leave China with little competition. The reconstruction of the Syrian army will also allow China to increase its arms exports.

Anonymous Chinese Employees on Why Western Brands Fumble When Marketing in China

From a creepy Burberry Chinese New Year ad campaign that featured a cast of devious-looking Chinese family members maniacally staring at their grandmother to a spooky and downright melancholy Prada campaign that made Chinese New Year feel more like a funeral than a celebration, big brand marketing failures surprisingly happen all the time in China.

Anonymous Chinese Employees on Why Western Brands Fumble When Marketing in China

Chinese police arrest suspect for selling tracking services to debt collectors
Chinese police have arrested a man for allegedly providing location tracking services to debt collectors, a novel case in which location-based mobile technologies were used to violate personal privacy.

Chinese police arrest suspect for selling tracking services to debt collectors

Chinese censorship the talk of Berlin after Zhang Yimou film pulled from festival – and no wonder
The Berlin International Film Festival looked like being a celebration of Chinese filmmaking; the withdrawal of Zhang Yimou’s One Second changed that With no explanation for the shock decision, international commentators had reason to focus on censorship amid tightening government control of the arts

China’s Demographic Crisis Is a Reality
If China wants to stabilize its fertility rate, it should take steps to lower the costs of parenthood.

What China is loving this Valentine’s Day
Valentine’s Day, which dates back to 496 AD in Rome, has no direct link to China, yet China’s romantics have become even more generous than their Western counterparts when spending on the holiday. According to studies by Master Card and the National Retail Federation, Chinese consumers spent an average of $274 on Valentine’s Day last year versus $144 for Americans.

Alain Gillard
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